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How EA's legal team keeps one eye on former employees

EA's passive aggressive counsel reminds ex-staff not to leak trade secrets when moving on to new jobs

Correspondence from Electronic Arts to an ex-employee has revealed how the publisher attempts to enforce confidentiality agreements and maintain control over company secrets long after staff have left the company.

A legal note to Ben Cousins, previously general manager of EA's Easy Studio, highlights how the publisher had "serious concern" about leaking company secrets and other confidential information - including the salaries of Electronic Arts' employees - when Cousins began to set up a Swedish studio for mobile publisher ngmoco.

"We understand that you recently accepted the employment as General Manger of ngmoco Sweden," states the correspondence. "EA is seriously concerned about the possible solicitation of its employees and the possible misuse of protected intellectual property and trade secret information by you and ngmoco in violation of your continuing obligations to EA, and we want to both remind you of your obligations to respect EA's confidential and proprietary information, as well as EA's relationship with its current employees, and inform you that we will take action if we discover past or future breaches of you obligations."

Electronic Arts was no doubt watching the new Swedish studio grow last year with great interest and the letter itself anticipates that a number of employees would jump ship and join Cousins at ngmoco.

EA listed a number of non-solicitation obligations that it insisted Cousins "cannot do" for six months after leaving the company.

Speak to any EA employee (including contacting directly or indirectly as well as having discussions with any EA employee who contacts you) about employment opportunities at ngmoco.

Interview any EA employee for a position as ngmoco.

Provide any information, directly or indirectly, to anyone at ngmoco or outside agents of ngmoco (e.g. recruiters) relating to any EA employees - no names, compensation information, performance information.

Use any EA information in order to draft job descriptions, recruiting materials, or set compensation for jobs being created in your new ngmoco studio."

The letter added: "Since, as we understand it, you are the only existing employee of the new ngmoco studio, it is EA's position that the above limitations effectively prevent you from hiring EA employees to initially populate your ngmoco studio."

The letter, sent July 1, 2011, was also sent to the founder of ngmoco, Neil Young, who left Electronic Arts in 2008 after eleven years. He sold ngmoco to DeNA in 2010 for more than $400 million.

Ben Cousins declined to comment further on the legal letter today, which at the time of press remains available online. But he did joke on Twitter that "The irony of course is that what EA covets as 'trade secrets', is actually 'crappy old-fashioned design' by DeNA standards :)"

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21 Comments

After the infamous bride's letter to EA we get this. Their concern about people likely to leave in favor of a startup makes me think that work conditions didn't improve much since then. Besides, I'm sure there are plenty of tricks to circumvent these limitations.

To be honest I'm not terribly shocked by this. EA are just trying to protect their established work force. I think this approach ("You may not recruit people from our company") is much better than the non-compete clauses that have been in all of my contracts so far, which were something along the lines of "After leaving our company, you are not allowed to work at any other competitor for 6 months.'

I can see arguments for both sides. Pouring thousands of dollars into training and ramping up someone, as well as all the money and effort into the knowledge base that makes your company effective is an investment that stings when it's lost.

However, IMHO, the individual rights and freedoms of where someone wants to work and what they do with their skills/knowledge takes priority over a company's investment into an employee's skill set. That's a risk you take when you train people.

Money invested into company IP however, (Tools, Workflows, Production Processes) is something grey I'm not touching with a 10-foot pole.

@Christopher: it seems a little bit pre-emptive to me. That is, while they probably have their reasons to fear in-house recruitment, a baseless letter like that is closer to stalking and harassing than anything else (ie: how do you know what I'm doing and why).
As for the no work for competitors rule, I agree that's usually ill-formulated and can be so ambiguous to force you into another kind of job, but for the same reason I doubt it can easily be enforced, although I recognize I'm not familiar with British law.

Wise people will realize that this practice is exists simply because of the way the industry has set itself up - from the biggest studios to the tiniest indies. They've all shoehorned the software engineering model onto a field that is primarily entertainment - not software engineering (though the latter plays a supporting role).

The notion that the size of the company matters is stupid. If the process is right, the size won't matter. Get the process down for a small indie and it will work even if it grows into a huge studio. (George Bernard Shaw once asked a woman if she would sleep with a man for $10,000 [or something like that]. She said it would depend on the cause. He then said, "Well in that case would you sleep with me for a fiver?" She said, "Mr Shaw, what do you take me for?" His response: "We've already determined that, we're just arguing about price now.")

As far as I'm aware, these sorts of clauses are illegal/unenforceable in many locations. Just as the employee generally has no "right" to a continued employment, I feel it's only fair that the employer has no right to dictate what they do when they leave the company.

And as noted by others, this is pretty standard in big business were trade secrets, IP etc...are part of the industry. In fact, I agree with Christopher that it's actually kinda lenient given it stipulates only a non-recruitment for 6 months clause rather than the standard non-competition clause.

That is not completely the case. In the UK, I believe there are white list, black list and grey list contract terms, black list are things that are not allowed to go into a contract and are therefore unenforceable, grey list items are not clear, white list are enforceable. As it was mentioned in a recent recent EA/Zynga article, non compete agreements are not recognised as legal in California, and as such are not enforceable if jurisdiction falls to California, and certainly if following terms of a contract to the letter meant commuting fraud or selling contraban, you would not be expected to keep to the contract.

Whether the terms of this particular contract are enforceable, I suspect that entirely depends on the laws in Sweden.

Edited 1 times. Last edit by Andrew Goodchild on 25th September 2012 9:56pm

@Jim: long time ago, in Italy, I signed a 3 months contract with a clause like: "the employee gives up the right to quit for the duration of the contract". Well, leaving the weirdness aside (the employer had a hard time finding employees, but short duration contracts allowed for taxes reductions), I asked a lawyer, who told me that the clause itself is invalid and couldn't be enforced. In fact it could have made the whole contract null. Just to say I wouldn't be surprised that similar clauses are just there as "scarecrows".

Michele, that might be an Italian thing. Here in the US, if you sign it, you abide by it. It's very hard to get out from under a legal contract unless it can be demonstrated the other party did something pretty bad.

You have that correct Andrew. UK employers are basically not allowed to interfere with ongoing employment opportunities and most non-compete stuff would not latch on unless you were doing something particularly blatant like using genuinely innovative, patetentable tech/insider research.

Having said that, I do think it's bad form for one guy to leave and then pull all his mates out too, generally speaking. EA get a lot of things wrong, but I have to side with them in this. They seem to do everything heavy handed of course, but that's largely because it's lawyers actually writing the letters.

To say that the effective counter is to make sure the people in question are well compensated is naieve. Everyone has their price and that is often lowered by the lure of starting something fresh with a buddy you already know you like working with. There's a lot of human nature getting in the way of business here, but both avenues need a fair shot. It's complicated.

Edited 1 times. Last edit by Paul Johnson on 26th September 2012 12:18am

In the UK there are very strong restraint of trade laws. So you can't stop a person practicing their craft once they have left.
Also this whole confidentiality thing is overblown. If someone leaves they are out of the loop and their knowledge of the company very quickly becomes irrelevant. Far better to just pay for 3 months gardening leave for those handing in their notice than go to law.

In Leamington there is a long tradition of people bailing out of Codemasters to set up studios. This has accelerated recently.
Overall this benefits Codemasters as it creates a local ecosystem within which they can operate.

I guess it depends if he is seeking out employees or not. Maybe they are coming to offer their services to him for free for a few months, then getting remunerated from that point in. Entirely possible.

Reading between the lines however, the answer for all is you have simply got to be offering a better deal for employees if you don't want them to leave for pastures new. Its really that simple. The market, the industry and the people constantly evolve and you've got to stay on the ball with that. Its really important when the products come from the minds of the people. Big companies can achieve this if they have solid career development in place I think.

Truman's curiosity was unstoppable once he came to the conclusion that he wasn't getting that a good deal. He even got on a boat and sailed into the unknown to satisfy it!

This is a non-solicit clause (you can't steal our staff or secrets), not a non-compete clause (you can't go and work for a competitor). I think non-compete clauses tend to be unenforceable, but I've seen non-solicit clauses enforced quite stringently. It's all fairly standard stuff.

Enforceability tends to fall on federal, state and local laws of each country. Typically in the US, if you sign, you must abide by it.

I always tell me colleagues to take any employment contract to a lawyer first to have them break it down for you. And why not? You can be damn sure they put it past their own legal department before handing it over to you.

@Jim: certainly there must be some limits to this? I can otherwise imagine people signing contracts like "you can't quit, you will take insults, only work for food and get beaten up every now and then" just because they are in some very bad situation (ie: no papers, no place to live, poor understanding of english). That would basically restore slavery. Ok it's a bit extreme but you get my point.